Wednesday, October 3, 2012

Tuesday made official what had been rumored for a few short weeks; T-Mobile and MetroPCS will be joining forces and will become one mobile wireless company, with the name remaining T-Mobile. The board of Deutsche Telekom, T-Mobile's parent company, as well as the board of MetroPCS both approved the merger, paving the way for the new provider to house approximately 42.5 million combined subscribers. Its annual sales will be in the neighborhood of 25 billion dollars, which will presumably put the unified company in a better position to invest in growing its fledgling 4G network and put a lower cost alternative to AT&T and Verizon Wireless into more consumers hands.

Some of you reading may be saying to yourselves "hey wait a minute...wasn't AT&T supposed to be buying T-Mobile, like last year?" - and if you did say that to yourself, you'd be right. A deal was in the works for AT&T to buyout T-Mobile, but the deal was scrubbed last year in a victory for deregulation. Apparently the governmental regulatory body that oversees such things had no such objection to the nation's 4th an 6th largest wireless providers (by revenue) joining forces. I'd be interested....if I was on the board of directors for AT&T. Which I'm not, so it really doesn't bother me that they got shot down.

But the interesting part of this is that both companies are really more well known for their "low pricing" approach to delivering wireless services. MetroPCS touts their "Unlimited talk and text" programs for just $25, as well as "Blazing fast, unlimited 4G for as low as $50 a month." T-Mobile also advertises that "No other network has unlimited nationwide 4G data" plus "limitless 4G data, talk, and text." Seem similar to you? Because it sure did to me. Generally, when two large companies merge (or a larger absorbs a smaller one) its because one side is gaining an advantage in an area or segment is currently lacks. To expand their low cost service to improve an underserved market, or to gain a competitive advantage in a new geographic location. Or to remove competition in the same segment outright. Neither of these appears to be the case with this merger. Both are super low cost wireless services and since they use different types of technologies (T-Mo utilizes GSM, MetroPCS uses CDMA) its going to be a huge pain in the butt to get them to play nice together. Eventually, with the new T-Mobile converting everyone over to their 4G standard, this will be resolved, but that won't happen for years at the earliest. One (and by one, I mean me) can't help but wonder if there is more going on behind the scenes of this story that is showing up in the tech media. I guess only time will tell.